Editor's Note: As an emerging-markets banking analyst, James Kostohryz has firsthand experience of banking collapses and their subsequent resolutions in Mexico, Argentina and Southeast Asia. Since leaving his position as Head of International Investments at Brazil's Banco Pactual in 2000, James has worked as an independent trader and investor.

Dear Professor Kostohryz,

I've been following your comments in Buzz & Banter, and I was interested in your opinion on gold. In particular, I wanted to ask about the correlation between gold and the dollar -- which haven't been correlated for some time -- and why they're now moving up at once. Some people have called this a fear rally driving gold, though now I see a number of people saying it's transitioning to an inflation rally. But can people change their rationale behind a rally that easily and justify increases? It's strange.

David

Dear David,

As you may know from the Buzz & Banter, a couple of weeks ago, I sold several gold stocks for a substantial profit. And I assure you, it had nothing to do with the US dollar/gold correlation.

Regarding the ever-shifting rationales cited by many gold “experts” (aka gold bugs) to buy gold, if you've been around long enough, you probably know this is a unique crowd. Among other things, they tend to be highly ideological. To them, everything and anything is a reason for gold to go up. And any decline in gold is dismissed as selling by ignorant people who, at best, don’t “get it,” or, at worst, by people who are part of some conspiracy.

Thus, we'll variously be informed by gold bugs, with great conviction, that if the dollar is down, that’s good for gold; if it's up, it’s good for gold. Gold is good as a hedge against inflation, and it's good as a hedge in times of deflation. If the S&P is going to crash, it’s good for gold; and if it rallies, it's good for gold. You get the picture.

Fundamentally speaking, at this juncture, I don’t think there's anything more to the gold/dollar inverse correlation than the fact that gold is an international commodity. If the value of gold remains constant on a trade-weighted currency basis, then its value in US dollars will decline when the dollar rises against a trade-weighted currency basket.

I say this correlation is of meager fundamental importance because, unlike many gold bugs, I believe that the super-bearish “dollar collapse” thesis is bogus. It's my fundamental view that the US dollar is actually more sound fundamentally than most of the world’s major currencies. If the US dollar ever collapses, other currencies will probably collapse faster and more profoundly than the US dollar.

Thus, gold might be a good investment in an environment in which there's a general crisis of confidence regarding fiat currencies, but it will have nothing to do with the correlation of gold versus the value of the US dollar relative to other currencies.

Certainly, it's possible that at times, there may arise an inverse correlation between gold and the value of the USD against other currencies, and that this movement may be related to the ascendance of doomsday “dollar collapse” theories. However, when such theories become popular, gold will tend to trade up, not only against the US dollar, but against everything else as well, on the basis of generalized fear - and speculation about fear.

To some extent, that was what was happening late last year. Gold was trading up against everything on the basis of general fear of a sharp deterioration of economic and financial conditions.

But, in truth, the specific fundamental basis for the gold/US dollar correlation is extremely weak. And to the extent that the correlation existed, it's because it was merely one indication amongst many others (equity, corporate bonds, CDSs, etc.) of a rise in generalized fear and a rise in systemic cross correlations amongst asset classes.

If one is bearish on the US economy, there are far superior vehicles to trade that hypothesis. For example, you could short equities, buy puts, etc. If you believe the US dollar is going down relative to other currencies, then play the currency markets and short the dollar against the yen or euro. And if you believe that all currencies are going down relative to gold, then buy gold. One has no necessary connection to the other.

Currently, the specific fear of a US dollar collapse has receded a bit, so one would expect the inverse correlation to gold might weaken, and it has. This brings us to another point. I think it's pretty clear that recently, gold has traded as a function of generalized fear (not just US-dollar fear) and speculation about a sharp deterioration in economic and financial conditions.

Look at the up and down days on the S&P and compare it to gold, day by day.

The idea -- propounded by many pundits, such as the ones you refer to -- that gold is currently trading as an inflation play, has little basis in fact. If that were the case, TIPS wouldn’t be projecting long-term below trend inflation. Long-term US Treasuries yields would not be at historic lows. And I could cite many other examples where action in financial markets directly contradicts the idea that inflationary pressures are building or that fears of inflation are building.

So I don’t think there's any real evidence that gold is trading as an inflation hedge. Besides, the fundamental case for inflation rearing its head anytime soon is extremely weak, to say the least. On this point, there are sophisticated ways to measure the “option value” of gold’s inflation hedge. When you perform such an analysis, it will indicate clearly that expectations of inflation have little or nothing to do with the recent dramatic rise in gold.

Gold is best viewed as a vehicle for a peculiar type of speculation. In particular, gold tends to trade as a function of speculations regarding general stress in the economy and the financial system. And one must analyze this within the context of a very particular community that trades gold. Because of this very specific milieu -- and the ideology that tends to drive people that trade in the yellow metal -- trying to find a fundamental rhyme or reason for the movements in gold is often an exercise in futility.

In a very real sense, and in many different ways, intense interest in gold can fundamentally be viewed as a symptom of irrationality. This is a market that's driven by greed, that traffics in fear; it's one where ideological dogmatism tends to reign, and where, as a result, rationality is at a discount. One must keep that firmly in mind when analyzing gold and gold-related markets.

Is Gold a Smart Indicator of Inflation?By James Kostohryz Mar 30, 2010 9:20 amWhat, if anything, the gold market is “telling” us about the prospects for a dramatic inflationary scenario on a global scale.

I suggest readers take a look at Howard Simon’s Article, entitled Gold Needs More Irresponsibility. It’s a really funny article that touches on some interesting points about the gold market. One of those points relates to how the gold market reacts to expectations about future inflation.

In a separate article yesterday entitled Gold Provides Invaluable Insight, Przemyslaw Radomski indirectly makes the useful observation that gold isn’t only rising against the USD, but against all currencies.

Why Invest in Gold? Getting the Reasons Straight

Many people think that investing in gold is a way to play a decline of the US dollar. As I've pointed out elsewhere (see Exterminating the Goldbugs), this is a nonsensical investment strategy. If you think that the USD is going to decline, then you should invest directly on that thesis by shorting the USD against some given currency or currencies (see UUP).

There are many perfectly legitimate reasons one might want to invest in gold, and most have nothing to due with the USD. For example, you might think that the demand for jewelry in India will rise significantly. Or you may expect that the supply of gold on the market at a given point in time may decline.

Another viable thesis is that the value of all fiat currencies around the world will soon decline en masse relative that of a given quantity of gold. The scenario is a bit macabre, but at least the investment thesis is coherent. Lest we think that this be completely unrealistic, as Radomski points out, gold has been recently gaining against just about every currency in the world -- just as it has, I’d add, for the better part of the past decade.

But this general “fiat trade” -- if you will -- is based on a very different sort of rationale than a prediction that the USD will decline. It’s important to understand this distinction.

The Difference Between Beliefs and Predictions

In this article I won’t address whether it’s sensible to buy gold as a financial markets investment based on the notion that all fiat currencies will soon fall victim to inflation. I will also won’t discuss whether there might be other investments that might outperform gold in such a global inflationary scenario.

What I would like to touch on in this article is the issue of what, if anything, the gold market is currently “telling” us regarding the prospects for a dramatic inflationary scenario on a global scale.

First of all, let’s distinguish between investors’ beliefs that markets transmit, and whether those beliefs are actually predictive of anything. Just for the record, virtually all of the serious empirical research that’s been done on the matter shows that gold isn’t a good predictor of inflation. In fact, my own research coincides with other academic research in suggesting that with the exception of a period during the 1970s, gold has, if anything, been a contrary predictor of inflation. (Don’t feel bad, gold fans. The research is also quite pessimistic regarding the ability of any variable or combination of variables to predict inflation in any sort of consistent manner.) So, let’s not confuse the beliefs of gold investors, or anyone else, with claims regarding their clairvoyance.

Having got that point straight, let us turn our attention to Howard Simons’ observations regarding the beliefs being transmitted by gold markets about future inflation.This is interesting to contemplate because unless we think that gold investors are from Mars and that investors in other financial assets such as bonds are completely different creatures from somewhere such as Venus then it would be somewhat strange to expect that the beliefs of gold investors regarding inflation will be significantly different than the beliefs about inflation being reflected in other financial asset prices. After all, global financial markets are integrated, and arbitrage should ordinarily be expected to smooth out such divergences.

The gold market is far from unique as a gauge of investor expectations about inflation. Indeed, bond markets are, by far, the largest and most liquid markets that reflect expectations about future inflation. What are they saying? Well, Howard Simons pointed out yesterday, the prices of TIPS as well as other fixed-income instruments started signaling last year that bond investors were expecting an uptick in inflation. Interestingly, gold investors seemed to be thinking the same thing as the price of the yellow metal was rallying at around the same time.

Then, at the beginning of last year inflationary expectations reflected in the bond markets started to wane. And perhaps not coincidentally, at virtually the same time, gold prices started to pull back.

So, the bond and gold markets seem to be agreeing in regards to the general direction of inflationary expectations. But some investors might be curious: What magnitude of inflation are we talking about here?

Well, in the bond market, depending on what exact indicator you look at, investors seem to be pricing in expectations for average annual inflation rates in the order of about 2.4% for the next 10 to 30 years.

How about the gold market? Well, that’s a little harder to divine. But I have developed a methodology that allows one to “read” the inflationary expectations priced into the gold market. The methodology is far from perfect, but I haven’t seen anything better. It essentially consists of analyzing the premium/discount of the price of gold to an estimate of the all-in marginal cost of producing gold. The value of this premium/discount should relate to expectations regarding the rate of future inflation. The model is built on the expectation that the price of gold at a given point in the future will roughly equal its all-in marginal cost of production and that the cost of producing gold will rise in line with inflation. I also assume that the all-in cost of a marginal producer to produce an ounce of gold is $800. One can change any of these assumptions accordingly.

Based upon this methodology, the gold market appears to be factoring in an average inflation rate of about 2.1% per annum for the next 10 years.

An amazing coincidence, no?

So How Attractive Is Gold as an Investment?

Somehow, I don’t think that most of the investors and speculators that have been piling into gold-based investments such as GLD and GDX in the past few years have been doing so in the expectation that inflation is going to be 2.1% per annum. Indeed, I think that if you told them that this is what the gold market is actually saying, they’d be aghast.

So what do you think? Do you think that the gold market is “smart” about inflation?If you do, then you must concede that the bond market is currently just as “smart,” as it’s pricing in about the same amount of future inflation. And if you concede this point you may conclude that buying gold is a waste of your hard-earned resources. A 10-Year Treasury Bond currently yielding 3.86% would be a much better deal as it would provide you with a substantially better real return on investment.

Or maybe you think that the gold market and the bond market is “dumb” and that they’re grossly overestimating/underestimating future inflation. Indeed, my analysis shows that if you believe that the average annual inflation rate will be above 2.1% for the next 10 years, then gold might still be a great bargain at current prices.

Or perhaps you think that the price of gold and bonds in the market are “manipulated” by global conspirators, thereby making their current prices irrelevant. In this scenario, and assuming that these conspirators won’t be able to continue holding the price of gold down for the next 10 years, then gold might still be a bargain at current prices.

For example, let’s assume that you think the gold market is currently either dumb and/or grossly manipulated and that you therefore disregard as irrelevant the information about inflation contained in current gold prices. Let us also assume that you think the average inflation rate for the next 10 years will average 10%. According to the model described above gold today would be worth about $1,980 to you. Is such forecast reasonable? On such assumptions about inflation, such a prediction for the price of gold is entirely reasonable.

But if you believe that the price of gold is going to explode to $2,000, $5,000, or whatever, don’t come around tomorrow and tell me how the rising or falling prices of gold are “predicting” anything about inflation. You’d be engaging in a gross contradiction.Conclusion

What’s my point? My point is that potential investors in gold need to get their story straight. You can’t go around saying that the gold market is an accurate predictor of inflation when it’s currently forecasting 2.1% inflation and at the same time go around saying that there’s gong to be hyperinflation within the next 10 years and that therefore gold is a great investment.

You either think that the gold market is smart (i.e. efficient) and therefore acknowledge that gold is probably a mediocre investment at best. Or you drop the nonsense about gold being a great “predictor” of inflation and simply say what you really believe -- which is that the gold market is dumb and/or that it’s grossly manipulated. You can’t have it both ways.

What’s my own take on gold? My views of gold as an investment have nothing to do with a prospective collapse of the USD, expectations of out-of-control inflation, or gold market conspiracies led by the Council on Foreign Relations. My view is that gold is in sweet spot right now and will probably remain so as long as global growth is strong. Strong global growth should drive vigorous jewelry demand in Asia and the Middle East as well as industrial demand around the world. Furthermore, the fears of rising inflation that always accompany economic recoveries should help maintain the level of investment demand for gold in positive territory.

For a different, more “hopeful” sort of rationale to be advanced in favor of gold, we need a lot more disastrous “irresponsibility,” in Howard Simon’s parlance.

But don’t despair if you believe in such a scenario: For belief in imminent financial Armageddon doesn’t necessarily imply that you will always be a grumpy old fuddy-duddy. As Howard Simons suggests, gold bugs are quite upbeat folks when speaking of economic meltdown -- in much the same way that Anne Stiller becomes the happiest woman on earth when she imagines her husband to be miserable.

Seriously, let’s be careful not to confuse our deep-seeded longings regarding what we’d like the world to be like with predictions of what it will actually become. And let’s be conscious of the logical implications of our beliefs.

In the case of the gold market, belief in its wisdom necessarily should imply recognition of the virtual impossibility of making any money in it. Furthermore, logical coherence requires that faith in the efficiency of the gold market be accompanied by a belief that the long-term rate of inflation should be quite low.

On the other hand, if you believe that the annual rate of inflation over the long term will be substantially over 7% then paraphrasing the urging of one Christopher by a certain Ferdinand: “Get gold, cheaply as possible, but by all hazards -- get gold."

The comedienne Anne Stiller, wife of Jerry and mother of Ben, had a signature line loosely remembered as, “If I knew you were miserable, I’d be the happiest woman on earth!” I have no idea what her position on gold is, if any, and I thought better of contacting her publicist for fear of winding up on one of those stalker lists, but her attitude toward others’ miseries always has struck me as redolent of gold bugs’ attitude toward the rest of humanity.

When we strip gold of all the mysticism, gold as a financial asset is really a very simple market: When expected inflation rises faster than the short-term interest rate costs of holding it, its price will apparently rise. A more accurate way of saying this is gold remains constant while the purchasing power of the currency measuring it declines.

Gold is an actual physical market replete with supply/demand balances as well. One of the great propellers of gold’s move higher between 2004 and 2008 was the income effect in India, Dubai, and other markets where gold was purchased, as it always had been, with newly acquired paper money.

This last factor allowed gold to rise during the period between 2004 and 2006 when short-term interest rates were rising. We can map the excess of expected inflation as derived from the TIPS market over the three-month repo rate against the price of gold both in US dollar terms and in dollars adjusted for changes in the dollar index. Once the Federal Reserve began its loose-goose response to the financial crisis in August 2007, marked with a magenta line, gold began to track the net expected inflation measure closely.

The net expected inflation measure peaked on January 11, 2010 at 2.415%, and has lost almost 30 basis points since then. Gold peaked on December 2, 2009 in USD terms; in dollar index-adjusted terms, it peaked much later, March 2, 2010.

The implications are astonishing: Years of ultra-low interest rates, global competitive devaluation of currencies, sovereign debt crises, and fiscal policy out of a Fellini movie have pushed gold so far but have been unable to push it further. The yellow metal needs an exponentially greater level of irresponsibility. Will you do your part?

Euro Gold

The picture changes if we look at gold priced in euros and construct a similar net expected inflation measure for the eurozone. Here gold rose along with the aforementioned increase in physical demand even as net expected inflation declined into the financial crisis of 2008, once again marked with a magenta line. Interestingly, the pace of gold’s ascent didn’t change materially before and after September 29, 2008: The two periods are identical at 80.6% confidence.

Gold’s recent rate of ascent in euro terms exceeds the change in net expected inflation. The idea that Europeans eager to hedge their continent’s woes are fleeing to gold and not to those once-scorned dollars isn’t supported in the data. Both measures have declined in recent weeks; net expected inflation peaked on February 19, 2010 and gold on March 5, 2010. The dollar has gained more than 2.05% against the euro on a full-carry basis since February 19, 2010.

Yes, we need more irresponsibility here in our global village. Some real Bugs Bunny, Zimbabwe numbers on inflation will do the trick. But then why would you ever sell your gold to get the paper money to buy food; were you planning on carrying your stash around with you?

In China News and Recent Moves in the Dollar Index, I analyzed the situation on the USD Index, and because it has just moved sharply higher, I believe you'd appreciate an update. After covering the situation on the US Dollar market, I'll move to the implications it may have on the precious metals sector.

Moving on to the technical part of this week's update, let's begin with the long-term chart:

Source: StockCharts.com

Previously I mentioned that I saw the USD Index break below the up-trending channel line. This move was confirmed with three consecutive closes below the lower channel trend line, so the next significant move in the index is likely to be down.

Well, by definition, from time to time unlikely has to occur, and this is what we've seen this week as the USD Index rallied dramatically higher. This week the USD Index pierced the lower border of the previous tradingchannel and once again moved inside of it. However, there is still a lot of evidence that this rally isn't going to last because the latest upswing is knocking up against resistance at the Fibonacci 50% retracement level of the previous decline (March to December 2009). Key Fibonacci levels have historically been reliable in identifying key support and resistance, especially on the US Dollar market.

In addition, the Relative Strength Index (RSI) is right at the 70 level and, looking at when this was the case, in the past four out of five times at least a small rally took place in the precious metals market. Therefore, the long-term USD Index chart suggests higher precious metal prices. Let's take a look at the short-term chart for more detailed view.

Source: StockCharts.com

What is even more visible on the short-term chart than it was with the long-term one is the way precious metals reacted to the recent strength in the US Dollar. Please note that even though the USD Index had a significant rally, Gold and Silver were basically unharmed as they moved down just slightly. I realize that the very recent downswing in precious metals might have appeared dramatic on a day-to-day basis; it's much less so when one compares it to the analogous move in the US Dollar. This certainly bodes well for the possibility of higher prices in the precious metals going forward.Therefore, despite this week’s price appreciation in the USD Index, I'm still not bullish on this market. Given the historical significance of the RSI being at 70 and the fact that the USD Index has just touched the 50% retracement of the previous rally leads us to anticipate that the recent USD Index rally will stall out and retrace. In addition, a rally for precious metals and precious metal stocks is looking more and more probable.

Additional details regarding the correlation between the USD Index and the precious metals can be found in our correlation matrix:

The main thing to notice on the correlation matrix this week is how we're starting to return to the highly negative correlation between the US Dollar and the precious metals. Look over the last 10 trading days how that the Gold/USD, Silver/USD, and HUI/USD are all starting to increasingly get more negative.

Additionally, please take a look at the 30-day column and the values of correlation coefficients between Gold and USD Index/S&P 500. What is particularly interesting is the fact that for the first time in many weeks the correlation between gold and USD Index is stronger than with the general stock market. Moreover, that is also the case with the HUI Index.

When I commented on the correlation matrix last week, I wrote:

These values are nothing to call home about per se, but once you compare them with the values from the previous week we see that they have all declined, suggesting that perhaps we won't have to wait too long for the return of the strong negative correlation between precious metals and the USD Index.

This week, I see stronger evidence of the return of the negative correlation between gold and USD Index, which (as mentioned two weeks ago) is one of the things that would indicate that the precious metal market is ready to move higher.

Summing up, the USD Index moved to its resistance level after having rallied strongly. This rally caused gold to move lower, but its decline was relatively small. This is bullish for precious metals in two ways. Firstly, it means that gold is once again becoming negatively correlated with the USD Index, which in the past meant that precious metals are ready to move higher. Secondly, it suggests that the gold market is strong, as it has held up relatively well.

Investors are braced for a further sell-off in US Treasuries after dramatic moves last week raised fears that the surfeit of US government debt is starting to saturate bond markets.

By Ambrose Evans-PritchardPublished: 9:06PM BST 28 Mar 2010

Comments 26 | Comment on this article

The yield on 10-year Treasuries – the benchmark price of global capital – surged 30 basis points in just two days last week to over 3.9pc, the highest level since the Lehman crisis. Alan Greenspan, ex-head of the US Federal Reserve, said the abrupt move may be "the canary in the coal mine", a warning to Washington that it can no longer borrow with impunity. He said there is a "huge overhang of federal debt, which we have never seen before".

David Rosenberg at Gluskin Sheff said Treasury yields have ratcheted up 90 basis points since December in a "destabilising fashion", for the wrong reasons. Growth has not been strong enough to revive fears of inflation. Commodity prices peaked in January and US home sales have fallen for the last three months, pointing to a double-dip in the housing market.

Mr Rosenberg said the yield spike recalls the move in the spring of 2007 just as the credit system started to unravel. "The question is how the equity market is going to handle this back-up in rates," he said.

The trigger for last week's sell-off was poor demand at Treasury auctions, linked to the passage of the Obama health care reform. Critics say it will add $1 trillion (£670bn) to America's debt over the next decade, a claim disputed fiercely by Democrats.

It is unclear whether China is selling US Treasuries after cutting its holdings for three months in a row, or what its motive may be. There are concerns that Beijing may be sending a coded message before the US Treasury rules next month on whether China is a "currency manipulator", though experts say China is clearly still buying dollar assets because it is holding down the yuan against the greenback. Some investors may be selling Treasuries as a precaution against a trade spat.

Looming over everything is the worry that markets will not be able to absorb the glut of US debt as the Fed winds down its policy of bond purchases, starting with an exit from mortgage-backed securities. It currently holds a quarter of the $5 trillion of the MBS market.

The rise in US bond yields has set off mayhem in the 10-year US swaps markets. Spreads turned negative last week, touching the lowest level in 20 years. The effect was to drive credit costs for high-grade companies such as Berkshire Hathaway below that of the US government. This may have been a technical aberration.

A London-based precious-metals trader who had accused JPMorgan Chase of manipulating the gold and silver markets was involved in a bizarre weekend car accident that triggered a police chase before the suspect was nabbed.

Andrew Maguire, a metals trader at the London Bullion Market Association, and his wife were traveling in their car when a second car coming out of a side street struck their vehicle. That car then hit two more vehicles before fleeing.

London cops using helicopters and patrol cars chased the hit-and-run driver before nabbing that person, whose name has not been released by authorities.

Maguire and his wife were released from the hospital yesterday. London police would not comment on the accident investigation.

The hit and run occurred after Maguire's name came to light Thursday during a US Commodities Futures Trading Commission hearing on limiting gold and silver positions held by large market participants in order to prevent manipulation.

During the hearing, Maguire was identified as having sent e-mails to Bart Chilton, a CFTC commissioner, and Eliud Ramirez, head of the commission's enforcement division, alleging that JPMorgan had used its massive metals positions to manipulate the commodities markets.

In one e-mail, Maguire wrote, "It is common knowledge here in London among the metals traders that it is JPM's intent to flush out and cover as many shorts as possible prior to any discussion in March about position limits," referring to last week's CFTC hearings.

JPMorgan inherited the positions when it acquired Bear Stearns two years ago.

When the allegations first surfaced last week, JPMorgan declined to comment.

March 29 (Bloomberg) -- The strengthening U.S. economy, subdued inflation and rising stock prices are propelling the dollar rally into its fifth month as traders seek refuge from Europe’s fiscal crisis and Japanese deflation.

Goldman Sachs Group Inc. and Citigroup Inc. ended bets on a falling dollar last week after the trades lost 2.8 percent. Strategists are raising greenback forecasts at the fastest pace since last March, just before U.S. stimulus efforts that poured as much as $12.8 trillion into the economy ended the currency’s strongest rally in 28 years. Median predictions for the dollar against 47 currencies tracked in Bloomberg surveys rose an average of 1.4 percentage points in the month to March 24.

A year after correctly predicting the currency’s decline and likening it to the fall of Rome, Royal Bank of Scotland Group Plc’s Alan Ruskin said it may soar 22 percent to $1.10 per euro if Greece defaults.

“We’ve moved away from the worst fears,” said Ruskin, the head of currency strategy for RBS Capital Markets in Stamford, Connecticut. “In the U.S., the economy picked itself up off the ground,” he said in an interview. “Compared to what it might have looked like from the view of March 2009, March 2010 looks very good.”

The U.S. Labor Department will report on April 2 that 190,000 jobs were created this month, the most in three years, according to the median estimate of 62 economists surveyed by Bloomberg. The Standard & Poor’s 500 Index has gained 5.6 percent in March, and the latest report on consumer prices showed the cost of living was unchanged in February, ensuring inflation won’t cut off the recovery.

Lagging Growth

Consumer prices in Japan, meanwhile, fell for a 12th month in February, the government reported March 26. The Organization for Economic Cooperation and Development said the same day that the nation’s potential growth rate between 2011 and 2017 will be the lowest among Group of Seven at 0.9 percent.

Leaders of the 16-nation euro region sought International Monetary Fund help to respond to Greece’s budget crisis. Portugal’s credit rating was cut one step by Fitch Ratings to AA- with a “negative” outlook, meaning there may be more downgrades.

“We have clearly underestimated the impact on the euro from the European sovereign crisis,” Goldman analysts led by Thomas Stolper in London said in a March 25 e-mail. “Building consensus among euro-zone members is becoming increasingly difficult,” they wrote, explaining Goldman’s decision to exit the bullish euro bet it made two weeks earlier. “These political headwinds currently matter far more for the euro than the cyclical factors.”

‘Inopportune’ Timing

Citigroup cut its losses on a similar trade after deciding its timing had been “inopportune,” strategists Todd Elmer in New York and Michael Hart in London wrote in a March 25 note.

Sentiment toward the dollar is shifting on optimism the currency’s best run since 2008 will be invigorated as Federal Reserve Chairman Ben S. Bernanke stops printing money and raises borrowing costs amid predictions the U.S. economy will grow twice as fast as Europe’s and Japan’s.

The dollar gained against all 15 major currencies tracked by Bloomberg last week except the Mexican peso, rising 1.1 percent to $1.3410 per euro, 0.8 percent to $1.4898 per pound and 2.2 percent to 92.52 yen. The Intercontinental Exchange Inc. Dollar Index is up 1.2 percent in March after gaining in each of the past three months.

Playing Catch-Up

The rally has been fueled by Greece’s debt-and-deficit crisis, which sparked speculation the euro region would suffer its first default or dissolve. Forecasters are trying to catch up with the euro’s decline. The median euro prediction has it at $1.36 by the end of the year, down from an estimate of $1.48 in December.

The Fed’s printing of dollars last year prompted Royal Bank of Scotland to predict in June the euro would appreciate to $1.40 by the end of 2009.

“The psychological impact should not be underestimated,” Ruskin wrote last March of the central bank’s quantitative- easing program. “This is an historic moment -- the start of debasement of the world’s reserve currency -- and it feels to many participants that in the grand sweep of history we are witnessing the end of ‘Rome’ on the Potomac.”

By last week, modern-day fiscal turmoil centered on the ancient city of Athens had prompted Ruskin to reverse course on the euro. “If major contagion occurs, we could go down to $1.15,” he said. “If it looks like one country is going to get cleaved off or there’s a default in the euro area, $1.10 would not be unreasonable.”

Loans for Greece

European leaders agreed last week to provide Greece with a mix of IMF and bilateral loans at market rates if the country runs out of fund-raising options. The accord didn’t specify what events would trigger the plan.

Greece is selling 5 billion euros ($6.7 billion) of seven- year bonds today. The securities will be priced to yield 310 basis points more than the benchmark mid-swap rate, according to a banker involved in the transaction, who declined to be identified before the sale is completed.

Dennis Gartman, the economist who correctly predicted in June 2008 that commodities would tumble, said the agreement doesn’t solve the euro region’s problems.

“This just pastes them over for a short period of time,” Gartman, who publishes a daily market commentary from Suffolk, Virginia, said on Bloomberg Television March 26. “The problem of Greece is just the first. Portugal lies next, Spain behind it, Italy behind that. This is not a pretty picture.”

‘Huge Issue’

Gartman predicted the euro will sink to as low as $1 within three years. The cost of protecting Portugal’s debt from default has risen 151 percent in the past six months, the second most in the world behind Greece, followed by increases of at least 52 percent for the U.S., France, the U.K., Belgium, Spain and Italy, credit-default swap data compiled by Bloomberg show.

“The Greek fiscal crisis may be over for now, but sovereign stress is likely to remain a huge issue in the euro area for years to come,” said David Mackie, the chief European economist at JPMorgan Chase & Co. in London, in a March 26 note.

Dollar gains may be limited by U.S. investors sending money overseas in search of higher yields as stocks worldwide climb. The MSCI World Index of developed market equities gained 42 percent in the past year as the MSCI Emerging Markets Index rose 66 percent.

‘Reserve Accumulation’

“We expect strong flows into emerging markets that will translate into reserve accumulation and diversification into the euro out of dollar,” said Daniel Katzive, a currency strategist at Credit Suisse Group AG in New York, who sees the dollar falling 6.2 percent to $1.43 per euro in three months. “It’s not just about recovery. It’s about how central banks respond to that recovery. We’ve seen the dollar weaken through a U.S. recovery if monetary policy is very accommodative.”

At this time last year, the Dollar Index was starting to slide after rising 21 percent in the previous nine months, the quickest gain since 1981, as investors sought the safety of U.S. assets amid the global credit crisis.

Then the Fed began to expand its quantitative-easing program, with $1.15 trillion in debt purchases to shore up credit markets. The currency declined 14.9 percent against the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona in nine months, the fastest drop since 1987 as measured by the Dollar Index.

Now futures traders are more optimistic on the greenback than any time since 1999, the year the European Union’s shared currency was introduced. Hedge funds and other large speculators had 74,917 more wagers the dollar would rise than contracts that profit from it falling as of March 23, the widest gap on record, Commodity Futures Trading Commission data show.

Inflation Mandate

Investors last year placed too much emphasis on the European Central Bank’s mandate to fight inflation when they bet on euro gains, said Marshall Gittler, the chief strategist for the international division at Deutsche Bank Private Wealth Management in Geneva. He predicts the dollar will gain as much as 5 percent this year against the yen as the Fed raises rates.

“All the majors are suffering from the same fiscal crises, but just at different speeds and severity; the market tends to target them in rotation,” Gittler said. “The euro’s the one out of fashion right now.”

The U.S. economy will expand 3 percent this year, outpacing the 1.1 percent growth in the 16 nations using the euro and 1.9 percent in Japan, the median estimates of as many as 53 economists show.

“The U.S. is always faster out of a recession than Europe or Japan; this is a cyclical rally in the dollar,” said Stuart Thomson, a money manager at Ignis Asset Management in Glasgow who helps oversee about $107 billion. He predicts the dollar will reach $1.26 per euro and 100 yen by the end of the year.

Rate Increases

The Fed will start raising its benchmark rate by Sept. 30 as the ECB and policy makers in Japan, the U.K., stand pat until at least the fourth quarter, consensus forecasts show.

“If you look at what’s happening today, it’s really a dollar move led by rates,” said David Tien, a money manager in New York who helps Fischer Francis Trees & Watts invest $19 billion. Tien predicts the euro will fall to $1.23 by Dec. 31. “So while some might say this is the euro getting destroyed, I take this as more of dollar strength coming through,” he said.

John Taylor, who oversees the world’s largest currency hedge fund as chairman of FX Concepts Inc. in New York, predicts the dollar will gain 12 percent to $1.20 per euro by August.

“The whole world’s been negative on the dollar since 2002,” said Taylor, who manages $9 billion. “Those people who are calling for the euro to go up are thinking the stock market is going to continue higher and that the euro zone problem is not going to spin out of control. I disagree with both of these things.”

To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.netLast Updated: March 29, 2010 10:44 EDT

Monday, March 29, 2010

Crimes-CorruptionToo Big To Jail? DoJ: Wall St. Bailout Buds 'Co-Conspirators' In Plot To Rip Off State, Local GovernmentsPublished on 03-28-2010 Email To Friend Print VersionAddThis Social Bookmark Button

Source: Crooks And Liars

Municipal bonds are where a lot of the political kickbacks and corrupt deals are typically hidden, so I can't say I'm surprised. In fact, it's sort of funny that the governments dealing with these guys apparently thought they could trust them, considering how crooked the business is. Lie down with dogs, rise up with fleas, as the nuns used to say:

March 26 (Bloomberg) -- JPMorgan Chase & Co., Lehman Brothers Holdings Inc. and UBS AG were among more than a dozen Wall Street firms involved in a conspiracy to pay below-market interest rates to U.S. state and local governments on investments, according to documents filed in a U.S. Justice Department criminal antitrust case.

A government list of previously unidentified “co-conspirators” contains more than two dozen bankers at firms also including Bank of America Corp., Bear Stearns Cos., Societe Generale, two of General Electric Co.’s financial businesses and Salomon Smith Barney, the former unit of Citigroup Inc., according to documents filed in U.S. District Court in Manhattan on March 24.

Gee, look how many were firms that were already taking money from us on the front end. They wanted the back end, too?

The papers were filed by attorneys for a former employee of CDR Financial Products Inc., an advisory firm indicted in October. The attorneys, as part of their legal filing, identified the roster as being provided by the government. The document is labeled “list of co-conspirators.”

None of the firms or individuals named on the list has been charged with wrongdoing. The court records mark the first time these companies have been identified as co-conspirators. They provide the broadest look yet at alleged collusion in the $2.8 trillion municipal securities market that the government says delivered profits to Wall Street at taxpayers’ expense.

Excuse me while I rush to my fainting couch. I'm a little dizzy from the shock.

“If the government is saying they are co-conspirators, the government believes they have sufficient evidence that they can show they were part of the conspiracy,” said Richard Donovan, a partner at New York-based law firm Kelley Drye & Warren LLP and co-chair of its antitrust practice. Donovan isn’t involved in the case.

The government’s case centers on investments known as guaranteed investment contracts that cities, states and school districts buy with the money they receive through municipal bond sales. Some $400 billion of municipal bonds are issued each year, and localities use the contracts to earn a return on some of the money until they need it for construction or other projects.

The Internal Revenue Service sometimes collects earnings on those investments and requires that they be awarded by competitive bidding to ensure that governments receive a fair return. The government charges that CDR ran sham auctions that allowed the banks to pay below-market interest rates to local governments.

[...] Banks may choose to cooperate with prosecutors because in light of the government bailout funds they’ve received “a guilty plea would just be an absolute disaster for some of these companies,” said Nathan Muyskens, a partner at Shook, Hardy & Bacon in Washington and former trial attorney with the Federal Trade Commission’s Bureau of Competition.

“There have been antitrust investigations where there have been companies involved that were just never indicted,” he said in a phone interview.

Yes, this is what's now known as "too big to jail." Why, they're too big for just about anything!

At the same time, the government will probably focus on seeking to convict individual bankers, he said.

“When someone goes to jail for five years, that resonates,” he said. “When a company pays $200 million, it’s simply a balance sheet issue. Jail time is what captures corporate America’s attention.”

Source: MoneyNews.comCentral banks around the world added 425.4 metric tons of gold to their reserves last year, the biggest increase since 1964, according to the World Gold Council.

That represents a 1.4 percent gain to put their holdings at 30,116.9 tons in total. The increase was the first since 1988.

Central banks in India, Russia and China were among those boosting their gold reserves last year, as the precious metal jumped 24 percent, hitting a record of $1,226 an ounce in December.

Central banks now possess 18 percent of all gold ever mined.

“There’s clearly been a renaissance of gold in central bankers’ minds,” Nick Moore, an analyst at Royal Bank of Scotland, told Bloomberg.

“It’s not just been central banks taking on gold, but a general shift for physical gold in the investment sector.”

Many are now singing gold’s praises, with the precious metal up about 3 percent so far this year.

“Gold is quietly, at the edge, becoming the world’s second reservable currency, supplanting the euro and rivaling the dollar,” money manager Dennis Gartman wrote in his Gartman Letter, obtained by Bloomberg.

“The trend shall continue months, if not years, into the future.”

David Skarica, editor of The Gold Stock Adviser, tells Moneynews.com that central banks will continue to buy gold.

“The next lot sold by the IMF (International Monetary Fund) will go to China’s central bank,” he said. “The IMF has a supply overhang.”

Do we have another Harry Markopolos here, describing in detail the manipulation of the silver markets by J.P. Morgan to the CFTC? How does this square with the testimony today from the CFTC Commissioners, who seem to indicate that the markets are functioning extremely well, and that investor can have full confidence in them?

I am led to understand that Mr. McGuire had offered to testify before the CFTC today, and that he was refused admittance. I do not know him, or the position he is in within the trading community. I cannot therefore assess his credibility or the validity of any evidence which he may present or possess. But I have the feeling that nothing will come of this.

Remember, there was no action on the Madoff scandal until AFTER his fraud collapsed, and the government was forced to acknowledge Markopolos' existence. He had been ignored and dismissed by the bureaucrats at the SEC for years because of Madoff's power and standing with the trading establishment. And of course by those who had an interest in hiding Madoff's scheme, if nothing else, to promote 'confidence' in the markets.

What seems particularly twisted about this is that JPM is the custodian of the largest silver ETF (SLV). Is anyone auditing that ETF, and watching any conflicts of interest and self-trading? Multiple counterparty claims on the same bullion?

If you ever wanted to see a good reason for the Volcker rule, this is it. These jokers are one of the US' largest banks, with trillions of dollars in unaudited derivatives exposure, and they seem to be engaging in trading practices like Enron did before it collapsed.

Have they lost their minds, or are they just that reckless, immature, short term, and arrogant? Morgan practically holds the keys to the US Treasury, a recent recipient of billions in taxpayer support, and still receiving signficant subsidies from the Fed. They seem to be in dire need of adult supervision. Blatantly and clumsily rigging the silver market, and then bragging about it to people outside their company. What's next, bumping off grannies for their Social Security checks? Three card monte games on the boardwalk?

I was trying to understand why this item struck me so hard this evening. It shocked me in a way that few things do anymore. I think it is because I had unconsciously come to the same conclusion earlier, on my own, in the post where I showed the repeated and obvious bear raids on gold into this option expiration, and it struck a resonant chord when I read McGuire's description of the silver manipulation. I refused to believe it, but apparently there it is. The "Dr. Evil" trading strategy that Citigroup was caught using in the Eurobond markets.

I do not expect the detailed facts on this to ever reach the light of day in my lifetime. The implications are far too political.

On March 23, 2010 GATA Director Adrian Douglas was contacted by a whistleblower by the name of Andrew Maguire. Mr. Maguire, formerly of Goldman Sachs, is a metals trader in London. He has been told first hand by traders working for JPMorganChase that JPMorganChase manipulates the precious metals markets and they bragged how they make money doing so.

In November 2009 he contacted the CFTC enforcement division to report this criminal activity. He described in detail the way in which JPM signals to the market its intention to take down the precious metals<. Traders recognize these signals and make money shorting the metals along side JPM. He explained how there are routine market manipulations at the time of option expiry, Non-farm payroll data releases, and Comex contract rollover as well as other ad hoc events.

On February 3 he gave two days advance warning by email to Mr Eliud Ramirez, a senior investigator of the Enforcement Division, that the precious metals would be attacked upon the release of the non-farm payroll data on February 5. Then on February 5 as it played out exactly as predicted further emails were sent to Mr. Ramirez in real time while the manipulation was in progress.

It would not be possible to predict such a market move in advance unless the market was manipulated.

In an email on that day Mr. Maguire said "It is 'common knowledge' here in London amongst the metals traders it is JPM's intent to flush out and cover as many shorts as possible prior to any discussion in March about position limits. I feel sorry for all those not in this loop. A serious amount of money was made and lost today and in my opinion as a result of the CFTC allowing by your own definition an illegal concentrated and manipulative position to continue"

Expiry of the COMEX APRIL call options is today. There was large open interest in strikes from $1100 to $1150 in gold. As always happens month after month HSBC and JPM sell short in large quantities to overwhelm all bids and make unsuspecting option holders lose their money. As predicted in advance by GATA the manipulation started on March 19th when gold was trading at $1126. By last night it traded at $1085.

This is how much the gold cartel fears the enforcement division. They thumb their noses at you because in over a decade of complaints and 18 months of a silver market manipulation investigation nothing has been done to stop them. And this is why JPM’s cocky and arrogant traders in London are able to brag that they manipulate the market.

It is an outrage and we are making available the emails from our whistleblower, Andrew Maguire available to the Press wherein he warns in advance of a manipulative event.

Additionally Mr. Maguire informed us that he has taped recordings of his telephone communications with the CFTC for which we are taking the appropriate legal steps to acquire.

I thought you might be interested in looking into the silver trading today. It was a good example of how a single seller, when they hold such a concentrated position in the very small silver market, can instigate a selloff at will.

(Note: This is the "Dr. Evil" trading strategythat got Citi rebuked and fined in the Euro Bond markets, and also got Enron into trouble in the energy markets. - Jesse)

These events trade to a regular pattern and we see orchestrated selling occur 100% of the time at options expiry, contract rollover, non-farm payrolls (no matter if the news is bullish or bearish), and in a lesser way at the daily silver fix. I have attached a small presentation to illustrate some of these events. I have included gold, as the same traders to a lesser extent hold a controlling position there too.... I brought to your attention during our meeting how we traders look for the "signals" they (JPMorgan) send just prior to a big move. I saw the first signals early in Asia in thin volume. As traders we profited from this information but that is not the point as I do not like to operate in a rigged market and what is in reality a crime in progress.

As an example, if you look at the trades just before the pit open today you will see around 1,500 contracts sell all at once where the bids were tiny by comparison in the fives and tens. This has the immediate effect of gaining $2,500 per contract on the short positions against the long holders, who lost that in moments and likely were stopped out. Perhaps look for yourselves into who was behind the trades at that time and note that within that 10-minute period 2,800 contracts hit all the bids to overcome them. This is hardly how a normal trader gets the best price when selling a commodity. Note silver instigated a rapid move lower in both precious metals.

This kind of trading can occur only when a market is being controlled by a single trading entity.

I have a lot of captured data illustrating just about every price takedown since JPMorgan took over the Bear Stearns short silver position.

I am sure you are in a better position to look into the exact details.

It is my wish just to bring more information to your attention to assist you in putting a stop to this criminal activity.

Kind regards,Andrew Maguire

Read more on this, and some particular examples of silver market manipulation, here.

Market Concentration - Approximately 80% of the Precious Metal DerivativesThis is remniscent of the Oil and Steel Trusts from the turn of the 20th Century

Friday, March 26, 2010

25 March 2010Whistleblower Speaks Out On J. P. Morgan's Market Manipulation - Reports Violations to the CFTC in the Silver Market

Do we have another Harry Markopolos here, describing in detail the manipulation of the silver markets by J.P. Morgan to the CFTC? How does this square with the testimony today from the CFTC Commissioners, who seem to indicate that the markets are functioning extremely well, and that investor can have full confidence in them?

I am led to understand that Mr. McGuire had offered to testify before the CFTC today, and that he was refused admittance. I do not know him, or the position he is in within the trading community. I cannot therefore assess his credibility or the validity of any evidence which he may present or possess. But I have the feeling that nothing will come of this.

Remember, there was no action on the Madoff scandal until AFTER his fraud collapsed, and the government was forced to acknowledge Markopolos' existence. He had been ignored and dismissed by the bureaucrats at the SEC for years because of Madoff's power and standing with the trading establishment. And of course by those who had an interest in hiding Madoff's scheme, if nothing else, to promote 'confidence' in the markets.

What seems particularly twisted about this is that JPM is the custodian of the largest silver ETF (SLV). Is anyone auditing that ETF, and watching any conflicts of interest and self-trading? Multiple counterparty claims on the same bullion?

If you ever wanted to see a good reason for the Volcker rule, this is it. These jokers are one of the US' largest banks, with trillions of dollars in unaudited derivatives exposure, and they seem to be engaging in trading practices like Enron did before it collapsed.

Have they lost their minds, or are they just that reckless, immature, short term, and arrogant? Morgan practically holds the keys to the US Treasury, a recent recipient of billions in taxpayer support, and still receiving signficant subsidies from the Fed. They seem to be in dire need of adult supervision. Blatantly and clumsily rigging the silver market, and then bragging about it to people outside their company. What's next, bumping off grannies for their Social Security checks? Three card monte games on the boardwalk?

I was trying to understand why this item struck me so hard this evening. It shocked me in a way that few things do anymore. I think it is because I had unconsciously come to the same conclusion earlier, on my own, in the post where I showed the repeated and obvious bear raids on gold into this option expiration, and it struck a resonant chord when I read McGuire's description of the silver manipulation. I refused to believe it, but apparently there it is. The "Dr. Evil" trading strategy that Citigroup was caught using in the Eurobond markets.

I do not expect the detailed facts on this to ever reach the light of day in my lifetime. The implications are far too political.

On March 23, 2010 GATA Director Adrian Douglas was contacted by a whistleblower by the name of Andrew Maguire. Mr. Maguire, formerly of Goldman Sachs, is a metals trader in London. He has been told first hand by traders working for JPMorganChase that JPMorganChase manipulates the precious metals markets and they bragged how they make money doing so.

In November 2009 he contacted the CFTC enforcement division to report this criminal activity. He described in detail the way in which JPM signals to the market its intention to take down the precious metals On February 3 he gave two days advance warning by email to Mr Eliud Ramirez, a senior investigator of the Enforcement Division, that the precious metals would be attacked upon the release of the non-farm payroll data on February 5. Then on February 5 as it played out exactly as predicted further emails were sent to Mr. Ramirez in real time while the manipulation was in progress.

It would not be possible to predict such a market move in advance unless the market was manipulated.

In an email on that day Mr. Maguire said "It is 'common knowledge' here in London amongst the metals traders it is JPM's intent to flush out and cover as many shorts as possible prior to any discussion in March about position limits. I feel sorry for all those not in this loop. A serious amount of money was made and lost today and in my opinion as a result of the CFTC allowing by your own definition an illegal concentrated and manipulative position to continue"

Expiry of the COMEX APRIL call options is today. There was large open interest in strikes from $1100 to $1150 in gold. As always happens month after month HSBC and JPM sell short in large quantities to overwhelm all bids and make unsuspecting option holders lose their money. As predicted in advance by GATA the manipulation started on March 19th when gold was trading at $1126. By last night it traded at $1085.

This is how much the gold cartel fears the enforcement division. They thumb their noses at you because in over a decade of complaints and 18 months of a silver market manipulation investigation nothing has been done to stop them. And this is why JPM’s cocky and arrogant traders in London are able to brag that they manipulate the market.

It is an outrage and we are making available the emails from our whistleblower, Andrew Maguire available to the Press wherein he warns in advance of a manipulative event.

Additionally Mr. Maguire informed us that he has taped recordings of his telephone communications with the CFTC for which we are taking the appropriate legal steps to acquire.

I thought you might be interested in looking into the silver trading today. It was a good example of how a single seller, when they hold such a concentrated position in the very small silver market, can instigate a selloff at will.

(Note: This is the "Dr. Evil" trading strategy that got Citi rebuked and fined in the Euro Bond markets, and also got Enron into trouble in the energy markets. - Jesse)

These events trade to a regular pattern and we see orchestrated selling occur 100% of the time at options expiry, contract rollover, non-farm payrolls (no matter if the news is bullish or bearish), and in a lesser way at the daily silver fix. I have attached a small presentation to illustrate some of these events. I have included gold, as the same traders to a lesser extent hold a controlling position there too....

I brought to your attention during our meeting how we traders look for the "signals" they (JPMorgan) send just prior to a big move. I saw the first signals early in Asia in thin volume. As traders we profited from this information but that is not the point as I do not like to operate in a rigged market and what is in reality a crime in progress.

As an example, if you look at the trades just before the pit open today you will see around 1,500 contracts sell all at once where the bids were tiny by comparison in the fives and tens. This has the immediate effect of gaining $2,500 per contract on the short positions against the long holders, who lost that in moments and likely were stopped out. Perhaps look for yourselves into who was behind the trades at that time and note that within that 10-minute period 2,800 contracts hit all the bids to overcome them. This is hardly how a normal trader gets the best price when selling a commodity. Note silver instigated a rapid move lower in both precious metals.

This kind of trading can occur only when a market is being controlled by a single trading entity.

I have a lot of captured data illustrating just about every price takedown since JPMorgan took over the Bear Stearns short silver position.

I am sure you are in a better position to look into the exact details.

It is my wish just to bring more information to your attention to assist you in putting a stop to this criminal activity.

Kind regards, Andrew Maguire

Read more on this, and some particular examples of silver market manipulation, here.

Market Concentration - Approximately 80% of the Precious Metal DerivativesThis is remniscent of the Oil and Steel Trusts from the turn of the 20th Century

The Vulcan Report - The Coming Collapse of the entire free market system

About Me

I worked on Wall Street for many years as a Systems developer and Money Manager. Presently a hired gun, running a private equity fund. I work with a broad base of private funds and am very selective in whom I ACCEPT as a client. My services are not normally open to the general public due to the secure nature of what I do. I extract large sums of money out of the markets on a regular basis. You can send me a private message to further discuss arrangements. I generally don't discriminate based on account size. However, this is not for everyone. SERIOUS INQUIRES ONLY!!!

This commentary is not a recommendation to buy or sell, but rather a guideline to interpreting the specified indicators. This information should only be used by investors who are aware of the risk inherent in securities trading. The Vulcan Report accepts no liability whatsoever for any loss arising from any use of this expert or its contents.liability whatsoever for any loss arising from any use of this expert or its contents.